Japan Spends Record $96.5 Billion in Month-Long Yen Rescue
Japan spent a record 15.4 trillion yen ($96.5 billion) in August to support the yen, including rare joint action with the US and South Korea.
Japanese authorities spent a record 15.4 trillion yen ($96.5 billion) on currency intervention over the past month, according to Finance Ministry data released on Friday. The unprecedented figure covers the period from July 30 to August 26 and highlights Tokyo's determination to lift the yen from its weakest levels in four decades.
The intervention came as the currency's decline threatened the profitability of Japan's major exporters and pushed up the cost of imports, particularly energy. Japan relies on imports for nearly all its energy needs, with 95% coming from the Middle East, leaving it vulnerable to supply disruptions.
The yen's weakness is rooted in the wide interest-rate gap between Japan and economies like the United States. The Bank of Japan's cautious approach to monetary tightening has kept domestic rates low, encouraging investors to borrow yen for global trades. While the BOJ held rates steady in July, policymakers have hinted at faster tightening, and markets currently price in a 65% chance of a hike at the September meeting.
The Finance Ministry's data provides a monthly total, with a detailed daily breakdown expected only when quarterly figures are released in November. However, BOJ data from earlier this month suggests the intervention on July 30 alone may have reached 9.6 trillion yen, far exceeding the previous daily record of 6.3 trillion yen set on April 30.
The operation included rare coordinated action with the United States, as well as a simultaneous won-buying intervention by South Korea's central bank to amplify the effect. The yen rallied from around 163 per dollar to as strong as 155.20 by August 3, before stabilising near 159.50.
Washington has signalled continued support for Tokyo's efforts, noting that Japan could access a COVID-era Federal Reserve backstop for major central banks. This facility, introduced in 2020, allows Japan to raise dollar liquidity without selling US Treasuries. US Treasury Secretary Scott Bessent said earlier this month that Washington would do "whatever it takes" to support yen stabilisation, warning that its substantial undervaluation could trigger competitive devaluations elsewhere.